India promised appropriate action after a US Trade Representative investigation report said New Delhi’s 2% tax on the digital economy is unreasonable or discriminatory, potentially attracting withdrawal of US trade concessions or duties on Indian exports. The tax, called equalization levy, came into force in April 2020.The office of the USTR said in a statement on Thursday that its investigation has led it to conclude that the tax was discriminatory because it exempts Indian companies and targets non-Indian firms. This hits US firms which dominate the technology industry. The USTR pointed out that of the 119 companies that it identified as likely liable under the digital services tax, 86, or 72%, were AmericanThe USTR has determined that India’s Digital Services Tax (DST) is unreasonable or discriminatory and burdens or restricts US commerce and thus is actionable under Section 301 (of its Trade Act), said the probe report. This section authorizes the US government to withdraw trade benefits, impose duties and import curbs or deny federal permits to supply services in some sectors. Also, it can engage with a foreign government to phase out the policy covered under the probe and offer compensatory trade benefits.
Courtesyg: Google (photo)
